"Sharaa Simsim" is one of many US-funded Palestinian programs suffering after Congress froze the transfer of nearly $200 million to the US Agency for International Development in October. The suspension aimed to punish the Palestinians for appealing to the United Nations for statehood.

The funding suspension – affecting hospitals, education, and government ministries that all rely on American aid – is breeding resentment and frustration in the West Bank and Gaza Strip, even among the most progressive organizations.

In the Ramallah offices of "Sharaa Simsim" on Thursday, the writing workshop room was empty and the set was closed.

"If we had funding, we would be writing scripts, we would be reviewing scripts, we would be hiring filmmakers to produce the videos," said executive producer Daoud Kuttab.

'Young children should not be penalized'

Even as the freeze put Palestinian Sesame Street on hold, the State Department is investing $750,000 in the Israeli version of the show, which is now filming its newest season with an emphasis on teaching children the value of fairness.

Danny Labin, an executive at the Israeli TV channel that co-produces Israeli Sesame Street, called the funding halt to the Palestinian show "extremely unfortunate."

"Young children, whether Israeli or Palestinian, who are in need of educational tools to foster diversity appreciation and to prepare for life in a pluralistic society, should not be penalized or held accountable to the politics and political leadership, over which they have no control," Labin said.

Promoting message of peace, tolerance

"Sharaa Simsim", the Palestinian show, debuted in 1996 and has produced five seasons since, with long intermissions for fundraising. It has promoted a message of peace and tolerance that Israeli critics say is often missing from Palestinian airwaves.

The main characters Haneen, a red-headed orange Muppet, and the green rooster Kareem have became household names for Palestinian children.

"Sharaa Simsim" is one of about two dozen international shows produced by the Sesame Workshop Staff, the parent company of the American show. Others are aired in Israel,
Egypt,
Russia and South Africa.

In each country, the New York-based Sesame Street staff consults with the local production teams to create a unique cast and content.

Kuttab said production takes months. At the beginning of each season, Palestinian educators and child psychologists work with the Education Ministry to craft themes and curriculum. Then writers draft the episodes, with occasional review from New York.

Filmed in Ramallah and airing on Palestinian national television, each 20-minute episode is half Palestinian content and half American footage.

"Sharaa Simsim" was supposed to begin this process in October, but Kuttab said the show won't be able to air in 2012.

"Every month we are behind schedule it actually means two or three months down the line," he said. "If we don't do the curriculum workshop we can't do the scriptwriting. If we don't do the scriptwriting we can't do the filming, and there are actors who have their own schedules."

From 2008-2011, USAID gave $2.5 million to the program, covering nearly the entire budget, Kuttab said.

USAID was scheduled to issue another $2.5 million grant to "Sharaa Simsim" last until 2014, Kuttab said. But in early October, Florida Rep. Ileana Ros-Lehtinen, a Republican, placed holds on $192 million in funding to USAID for programs in the West Bank and Gaza.

She said this was in reaction to the Palestinian's appeal to the UN to admit the Palestinians as a full member state. The US, Israel and others oppose the move, saying a Palestinian state can only come about through negotiations.

Congress restored $40 million of the funding in December but it's doubtful any will go to the show. Many programs are clamoring for funding, including healthcare and humanitarian projects, said a USAID official, speaking on condition of anonymity because of ongoing Congressional debates.

Bradley Goehner, spokesman for Ros-Lehtinen, did not say if the intention was to cut Palestinian Sesame Street and other programs, or if more USAID funding would be restored.

"It is a matter that continues to be discussed with the administration and pertinent members," Goehner wrote by email.

American opposition to the Palestinian bid raised hackles in the West Bank, ruled by the Western-backed Palestinian Authority. Days after the USAID funding hold, Palestinian protesters hurled a shoe at an American diplomatic convoy in Ramallah.

Nasser Abdul Karim, an economist at Birzeit University in the West Bank, said the freeze hurt Washington's image and will push Palestinian groups to diversify their funding.

"Because of the US support of the Israeli agenda, (Palestinians) look at American aid with a lot of suspicion," Abdul Karim said.

The U.S. donates more than $500 million a year to the Palestinians, including funds for security forces, the government's operating budget and USAID programs.

Kuttab said he is using some last-minute funding from the Palestinian Authority to tape small-scale children's programs. Core staff are working on reduced salaries, and freelancers are off the payroll.

In the meantime, the show's Muppets have been sent to New York for repairs.

Sesame Workshop in New York confirmed the Palestinian show is on hold. Spokeswoman Beatrice Chow said Sesame hopes USAID will resume its support.

Since it was founded, "Sharaa Simsim" has reflected the region's political ups and downs.

In the first season, Muppets from Israeli and Palestinian programs visited each other on TV. After the outbreak of the second Palestinian uprising in 2000, the cooperation crumbled.

USAID backed out of funding after the Hamas militant group won Palestinian elections in 2006, and Kuttab scrambled to create a mini season with funding from Holland and small organizations.

Actor Rajai Sandouka, who plays the rooster Kareem, said he is working as a freelance actor in theaters and as a drama teacher while he waits for the latest freeze to be lifted. He said kids recognize his voice when he is on stage, even when he plays other characters.

"A lot of people are asking about me," said Sandouka, 50, from east Jerusalem.